Biz community urged to brace for VAT impact

Manama : Bahrain’s business community has been urged to take necessary steps in preparation for the soon-to-be implemented Value Added Tax (VAT) system.

The impact of the VAT regime was being discussed in an awareness seminar organised by Bahrain Chamber of Commerce and Industry (BCCI) in collaboration with PricewaterhouseCoopers (PwC) Bahrain at Four Seasons Hotel Bahrain Bay yesterday.

The PwC experts said the businesses should familiarise with the local VAT system and ensure that they hire or train staff to take on the responsibilities. 

“If you are going to sign a long-term contract, you need to ensure that you include a VAT clause. The other party may not like it, but it is important to do this,” one of the experts said.

He added that building a tax administration in the Kingdom would be a great test.

“In order to build a tax administration, Bahrain needs to train its workforce. It is a challenge to go from having no tax authority to having a fully functional tax regime in a short period of time,” he said.

Responding to questions from the participants, he clarified that VAT tax would only cost the consumers rather than the businesses.

“VAT is a consumption tax, it is a tax on the consumers, not on the middlemen. Though the businesses pay the tax amount to the government, they would be able to recover the amount by charging the consumers. However, businesses need to take care of the administrative responsibilities,” he added.

Speaking about the local talent available in the Kingdom, he said, “There are a lot of qualified accountants in Bahrain -- locals as well as expatriates -- and they would be the ones who should take charge.”